If the Velocity of Money Is Constant, Then a 2

question 105

Multiple Choice

If the velocity of money is constant, then a 2% increase in the money supply

• A) must be the result of a 2% increase in the price level.
• B) would change nominal GDP by a smaller percentage.
• C) would change nominal GDP by an equal percentage.
• D) would change nominal GDP by a larger percentage.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue.

Cumulative

Refers to the aggregate amount that has been gathered or accumulated over time.

Par Value

A nominal or face value assigned to a share of stock or a bond by the issuing company, often unrelated to its market value.

Common Stock

A type of security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.